Breaking Down the Health Care Ruling – A Little Something for Everyone

Interested in what it all means, I spent some time last night and today reviewing the Supreme Court opinion on the Affordable Care Act. On first reflection, there’s something in it for everyone. Liberals get their 100-year health care project upheld. Conservatives get an important decision on the Commerce and Necessary and Proper Clauses that could have beneficial long-term impact for restraining the heretofore unbridled expansion of the federal government. Here are the big legal points:

Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority…. Indeed, the Government’s logic would justify a mandatory purchase to solve almost any problem…

People, for reasons of their own, often fail to do thing that would be good for them or good for society. Those failures—joined with the similar failures of others—can readily have a substantial effect on interstate commerce. Under the Government’s logic, that authorizes Congress to use its commerce power to compel citizens to act as the Government would have them act. That is not the country the Framers of our Constitution envisioned. James Madison explained that the Commerce Clause was “an addition which few oppose and from which no apprehensions are entertained.” The Federalist No. 45, at 293. While Congress’s authority under the Commerce Clause has of course expanded with the growth of the national economy, our cases have “always recognized that the power to regulate commerce, though broad indeed, has limits.” Maryland v. Wirtz, 392 U. S. 183, 196 (1968). The Government’s theory would erode those limits, permitting Congress to reach beyond the natural extent of its authority, “everywhere extending the sphere of its activity and drawing all power into its impetuous vortex.” The Federalist No. 48, at 309 (J. Madison). Congress already enjoys vast power to regulate much of what we do. Accepting the Government’s theory would give Congress the same license to regulate what we do not do, fundamentally changing the relation between the citizen and the Federal Government.

Everyone will likely participate in the markets for food, clothing, transportation, shelter, or energy; that does not authorize Congress to direct them to purchase particular products in those or other markets today. The Commerce Clause is not a general license to regulate an individual from cradle to grave, simply because he will predictably engage in particular transactions. Any police power to regulate individuals as such, as opposed to their activities, remains vested in the States.

NECESSARY AND PROPER MEANS NECESSARY AND PROPER – Justice Roberts further clarified that the federal government can’t use the Necessary and Proper Clause to justify an otherwise unconstitutional statute:

Applying these principles, the individual mandate cannot be sustained under the Necessary and Proper Clause as an essential component of the insurance reforms. Each of our prior cases upholding laws under that Clause involved exercises of authority derivative of, and in service to, a granted power. For example, we have upheld provisions permitting continued confinement of those already in federal custody when they could not be safely released. The individual mandate, by contrast, vests Congress with the extraordinary ability to create the necessary predicate to the exercise of an enumerated power….Even if the individual mandate is “necessary” to the Act’s insurance reforms, such an expansion of federal power is not a “proper” means for making those reforms effective.

THE TAX ISSUE: CONGRESS AND THE PRESIDENT HAVE LICENSE TO OBFUSCATE – Justice Roberts’ stretched to find the mandate is really a tax. As noted in Roberts’ opinion, §5000A(a) of the act states that individuals “shall” maintain health insurance. Roberts’ notes that the question of whether the mandate is really a tax is not “whether that is the most natural interpretation of the statute, but only whether it is a ‘fairly possible’ one.” Scalia’s dissent rips into this reasoning and the lack of briefing and prior discussion on the issue:

[T]o say that the Individual Mandate merely imposes a tax is not to interpret the statute but to re-write it. Judicial tax-writing is particularly troubling. Taxes have never been popular, see, e.g., Stamp Act of 1765, and in part for that reason, the Constitution requires tax increases to originate in the House of Representatives. That is to say, they must originate in the legislative body most accountable to the people, where legislators must weigh the need for the tax against the terrible price they might pay at their next election, which is never more than two years off…We have no doubt that Congress knew precisely what it was doing when it rejected an earlier version of this legislation that imposed a tax instead of a requirement-with-penalty….

The Government’s opening brief did not even address the question – perhaps because, until today, no federal court has accepted the implausible argument that §5000A is an exercise of the tax power. And once respondents raised the issue, the Government devoted a mere 21 lines of its reply brief to the issue. At oral argument, the most prolonged statement about the issue was just over 50 words. One would expect this Court to demand more than fly-by-night briefing and argument before deciding a difficult constitutional question of first impression.

I see two potential issues here not fully addressed in any of the opinions.

First: Does the sales pitch matter? Congress and the President clearly argued the mandate wasn’t a tax. Congress rejected an outright tax in a prior version of the bill. Three years later the bill is upheld on a basis for which it was never sold. On the one hand, Justice Roberts is no doubt correct that a tax should be determined solely by its features and not by the obfuscating arguments of a law’s supporters. Scalia’s dissent argues the tax matter based on its underlying features to, but also raises the question effectively argues that Congress and the President cannot defend legally defend a statute as something they earlier swore it wasn’t. Roberts’ clear answer to that the question, however, was no, the sales pitch doesn’t matter.

Second: Can Congress tax inactivity? I have no idea on the answer to that question and would suspect the answer is undoubtedly yes given the lack of briefing suggesting otherwise. However, one point is in order.

The Constitution has two parts. The first part deals with government structure and protects individual liberties through a system of check and balances on and between the branches of government (horizontal checks) and the states (federalism). The second part expressly protects the liberties of American citizens (i.e. the Bill of Rights and later amendments). There is clear case law that Congress cannot condition the exercise of a constitutional right on the payment of a tax. For example, government can’t place a special tax on newspaper publishers, nor can they institute a poll tax before allowing someone to vote. Thus, Congress cannot use the tax and spend power to violate a liberty protected by the second part of our Constitution. I am not aware of any case law on whether the federal government can use Tax and Spend authority to thwart a structural check on governmental power. Perhaps if properly briefed, this would have been a case of first impression on that issue. Somehow I doubt it and there’s probably a case out there on point – nevertheless, it’s a question worth asking. If I were getting paid by the hour to do this, I could no doubt come up with a 30 page memo on the topic and give you a definitive answer. In the absence of a client willing to pay for that, I leave it for others.

THE FEDERAL GOVERNMENT CAN’T ACT LIKE THE GODFATHER – Justice Roberts’ opinion regarding state Medicaid spending puts real teeth into the Spending Clause – and, by proxy, the Tenth Amendment. Roberts writes, “In this case, the financial “inducement” Congress has chosen is much more than “relatively mild encouragement”—it is a gun to the head.” This case clearly establishes that Congress may not attempt make states an ‘offer they can’t refuse.’

JUSTICE GINSBURG’S DANGEROUS READING OF THE COMMERCE CLAUSE – Justice Ginsburg’s concurrence would read the limitations in the Commerce Clause out of the Constitution. Rather than stating a definitive rule of law, Ginsburg would have Commerce Clause challenges decided on an ad hoc basis, based on “practical considerations.” And she would add a rational basis test – if Congress had a rational basis to act and there was a reasonable connection between regulation and the asserted end, the Court should uphold a statute under the Commerce Clause. As the Scalia dissent notes:

It is true enough that Congress needs only a ‘rational basis’ for concluding that the regulated activity substantially affects interstate commerce… But it must be activity affecting commerce that is regulated, and not merely the failure to engage in commerce…Our test’s premise of regulated activity is not invented out of whole cloth, but rests upon the Constitution’s requirement that it be commerce which is regulated. If all inactivity affecting commerce is commerce, commerce is everything. Ultimately, the dissent is driven to saying that there is really no difference between action and inaction…a proposition that has never recommended itself, neither to the law nor common sense.

Ginsburg’s dissent is dangerous. In our constitutional system, it is the legislature’s role to take ‘practical considerations’ into account when crafting new laws. The judiciary’s role is to rule on the basis of the Constitution – not to make itself a super-legislature determining which ‘practical considerations’ are worth upholding a statute and which are not. Scalia points out:

The dissent’s exposition of the wonderful things the Federal Government has achieved through exercise of its assigned powers, such as “the provision of old-age and survivors’ benefits” in the Social Security Act, ante, at 2, is quite beside the point. The issue here is whether the federal government can impose the Individual Mandate through the Commerce Clause. And the relevant history is not that Congress has achieved wide and wonderful results through the proper exercise of its assigned powers in the past, but that it has never before used the Commerce Clause to compel entry into commerce.3

In its effort to show the contrary, JUSTICE GINSBURG’S dissent comes treats the Constitution as though it is an enumeration of those problems that the Federal Government can address—among which, it finds, is “the Nation’s course in the economic and social welfare realm,” ibid., and more specifically “the problem of the uninsured,” ante, at 7. The Constitution is not that. It enumerates not federally soluble problems, but federally available powers. The Federal Government can address whatever problems it wants but can bring to their solution only those powers that the Constitution confers, among which is the power to regulate commerce. None of our cases say anything else. Article I contains no whatever-it-takes-to-solve-a-national-problem power.

JUSTICE GINSBURG’S CONCURRENCE CONFUSES THE PURPOSE OF THE CONSTITUTION – Justice Ginsburg cites “the democratic process” as a formidable check on congressional power worth noting. Ginsburg forgets that the Constitution was created as a check even on the democratic process. Our Founders believed certain things were so important that they had to be given extra protection and made nearly impossible to change through the normal democratic process. The Constitution was created entirely to protect future citizens from overactive excitable politicians and presidents. We have a government of limited powers – constrained by a written Constitution – not one subject to the sole check of the ‘democratic process.’ To argue otherwise is to assert that nothing Congress does is unconstitutional.